Kuwait fines 16 exchange firms for currency rate fixing

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KUWAIT CITY: The Disciplinary Board of the Competition Protection Authority has approved significant financial penalties on 16 out of 20 exchange companies accused of violating a monopoly agreement to unify foreign currency exchange rates. This agreement, deemed harmful to healthy competition by the Authority and the Disciplinary Board, violated the business model, its law, and its executive regulations.

The sources reported that the fines imposed on these companies ranged between 1%, 3%, and 5% of their total revenues from the fiscal years 2020 to 2022. These penalties were based on evidence that the companies had colluded to fix exchange rates over a period of time.

In 2023, the revenues of the 32 exchange companies operating under the Central Bank of Kuwait’s supervision amounted to approximately 80.15 million dinars, including 60.3 million from currency sales, 18.87 million from other revenues, and 972.5 thousand from bank interest. These companies recorded net profits of 43.08 million dinars last year. Additionally, around 105 banking institutions are subject to the Ministry of Commerce and Industry’s supervision.

The penalties were approved after the Authority investigated these companies’ practices, specifically their violation of Chapter Two, “Practices Harmful to Competition,” Article (5). This article prohibits agreements or actions related to horizontal relationships, such as indirectly determining product prices by raising, lowering, or fixing them.

The investigation concluded that the alliances formed between the exchange companies to unify foreign currency prices led to price fixing, violating the Competition Protection Law, which prohibits any agreements to unify prices. This practice impacted service quality and product competitiveness, contradicting the Authority’s policy to monitor markets and commercial sectors. Such agreements fall under monopolistic practices that hinder fair competition in the markets.